“We don’t have the tools to be able to address the structure of unemployment across groups, but a stronger economy generally really does tend to be beneficial to all Americans and that’s what we are working towards”, she said. Economists surveyed by MarketWatch had expected a seasonally adjusted 220,000 increase in nonfarm jobs. The economy has added 1.4 million jobs to date this year. Anything above 200,000 is considered very solid. The economy grew at an anemic 1.5 percent annual rate in the first half of 2015 – almost half a percentage point weaker than the average of the past three years. That would mean the labor market is operating beyond what economists consider full employment, raising the risk of higher inflation. Now the Fed is close to concluding that the economy is strong enough to withstand higher rates.
But some – mostly liberal – economists and activists have long argued that we are still far from the employment levels needed to spur substantial wage growth across the earnings spectrum.
Most industries with the notable exception of the energy sector – battered by cheap oil – added workers.
Those two data points may be good omens for wages, whose lackluster performance is shown in the graph below, Goldman Sachs says.
What will the Fed do?
The figures could affect if and when the Federal Reserve hikes interest rates later this year, as the central bank’s head Janet Yellen has repeatedly said the decision depends mainly on improvement in the job market. The Fed has said it will only hike rates if it believe the economy is healthy enough, especially for workers.
The robust US auto market encouraged dealerships to add 13,000 jobs, about a third of the total retail sector gains.
Chris Williamson, chief economist at Markit, agreed that the rebound in economic data adds to the likelihood of the Fed starting to raise rates. Average hourly earnings in July increased just 2.1% from a year earlier. The 0.2% advance was the smallest in data going back to 1982 and followed a 0.7% increase in the first quarter.
The takeaway: Economic growth has been okay this year – solid but nothing to get excited about.
Oilfield giants Schlumberger and Halliburton, two big oil service companies that plan to merge, disclosed last week that they had cut 27,000 jobs between them this year.
However, there were some encouraging employment signs in July.
And those employed only part-time who wanted full-time jobs was little changed at 6.3 million.
Since the recession began in late 2007, 14.5 million people have left the job market, either abandoning their search for work, choosing to retire or staying in school longer. Yet earlier in June, he indicated that he too would support gradual rate increases. The U6 unemployment rate has not been below 10 percent since May 2008, when it was reported at 9.7 percent.
The odds of a rate boost at the December meeting were 79%, compared with 72% before the report and 73% on Thursday.
A new era of higher rates on home and vehicle loans, steeper borrowing costs for businesses and the government – maybe even a bit more return for savers – is about to arrive.